Forum for Science, Industry and Business

British small shopkeeper is an endangered species says top retail researcher

21.02.2006

The British are a nation of shopkeepers, Napoleon observed. But the traditional British small shopkeeper is an endangered species. Corner shops are disappearing at a rate of nearly 40 a week, according to a new all party parliamentary report. Now, a leading academic says urgent action is needed if one of Britain’s great institutions is to be saved.

Ian Clarke, a professor at Lancaster University Management School (LUMS) who has spent the last four years researching the plight of the UK’s independent shops is calling for immediate action. He believes that the new report by the All-Party Small Shops Group does not go far enough. “The rate of small store closure is not a new phenomena – it has been going on for decades”, he says. “What is new is the recognition that the rate of closures of small independent shops is directly linked to the growth of supermarkets”.

Professor Clarke, who is currently leading a major research project argues that to save our corner stores, the UK’s regulator authorities need to take drastic action in four areas:

1. There should be an immediate embargo on acquisitions of small store chains by the supermarkets.

2. The two-market definition currently used by competition authorities – “convenience” and “one-stop” which allows supermarkets to buy up convenience stores unchallenged, should be overhauled.

3. Consumer choice should be measured on the ground locally, to understand what consumers actually want, and makes them satisfied.

4. The way we understand consumer choice should be widened – beyond simply having access to the major supermarkets. The massive expansion of the major supermarkets over the last 20-30 years, coupled with their huge market shares and buying power has brought evermore superstores within our reach as consumers -- a pattern repeated right across the UK. However, the main casualty of this trend is the small independent store sector.

Professor Clarke added: “The major supermarket operators are aware of the effect they are having. But they are reluctant to admit it. Instead, they tell us they need to expand to be ‘more competitive’. They are putting the corner shop at risk under the guise of ‘giving the customer what they want’”. Supermarket chains like Tesco, Asda and Sainsbury compete among themselves for the benefit of the consumer - by bringing down prices and expanding choice. But, if they are also pushing independent local shops out of business you have to ask if that is really in consumers’ best interests.”

“Competition authorities need to review what competition is really for. If it is to increase choice, then let’s start evaluating choice at the really local level as the UK Competition Commission suggested in its report on supermarkets in 2000 – the level at which we live our lives. The type of question we need to be asking is: does having several stores in a given locality, all owned by the same chain mean adequate choice for the consumer? Or does it mean having all the major supermarket chains accessible? Or having large stores and a healthy variety of smaller stores? Our previous research tells us is that it is the latter. This is a wake-up call”.

Professor Clarke’s research shows that consumers are shopping more frequently, blurring the boundaries between ‘convenience’ and ‘one-stop’ shops – which is critical, because regulators in the UK consider these to be two different markets rather than one. Not recognising this fact is allowing the major supermarkets to expand their small store formats through acquisitions of chains and new store building. But, the research shows that people want genuine diversity at the local level to be sustained through support of the independent store sector.

Research results will be available later in 2006 that measure the impact of different levels of local retail provision and what this means for consumer satisfaction. This will give a much clearer idea of what levels of supermarket provision customers regard as ‘adequate’, ‘good’ and ‘excessive’, and how this understanding can be used to guide and regulate the sector.

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